GRANGE
RESOURCES
2
Grange
Resources
focuses on
the Savage
River project
The International Resource Journal
November/December 2009
November/December 2009
The International Resource Journal
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Mining
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The International Resource Journal
November/December 2009
Grange Resources
As Australia’s largest integrated magnetite
mining and pellet production company,
Grange Resources Limited has quite the tale to
tell. Russell Clark, Managing Director, joined
the company in March of 2008, lured by the
fantastic opportunities offered by Grange
Resources and the strong iron ore market.
“At that time, Grange had a very large
development project in Western Australia
called the Southdown project. Through the
course of last year, we did a deal with the
Chinese owners of a very large operating
mine in Tasmania,” Clark recalls.
The International Resource Journal
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Mining
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The International Resource Journal
November/December 2009
Grange Resources
This operating mine Clark speaks of is
Today Savage River and Southdown
the Savage River project, 100 kilometres
continue to grow from strength to strength.
southwest of Burnie on the North West coast
IRJ caught up with Clark to hear the latest
of Tasmania. It is Grange’s flagship project:
news on these exciting projects.
a magnetite iron ore mine with current
The Savage River project
reserves estimated to last up to 2028.
“The Savage River Mine was privately held
The first thing which sets both Savage River
by a number of Chinese companies, the major
and the Southdown project apart from the
one being Shagang (Shagang International
pack is that they are magnetite projects.
Holdings Limited). Shagang is the largest private
“In Australia, magnetite projects are generally
steel maker in China and the fourth largest
less well-regarded, primarily because the bulk
steel maker overall, producing in excess of 23
of iron ore mined in Australia is haematite.
million tonnes per annum of steel. We merged
That’s a lot easier to mine and deal with, and
their operation into Grange,” Clark says.
with a little work the magnetite product is
actually a far better quality product that you
“It was effectively a reverse takeover
and the total Chinese shareholding
became 68 per cent of Grange. We
did that in January of this year and
it has transformed our company. We
started out as a junior company with
a very large development project
and became Australia’s leading
magnetite producer with a very large
operation in Tasmania and cash flow
to help support the development of
the new project (Southdown).”
get a better price with,” Clark explains.
“The Savage River mine has been in
operation for about 40 years. It’s a largescale open pit mine moving about 65 million
tonnes per year and we have a very modern
set-up there. We invested about $100 million
dollars in new equipment in the past year and
in a large maintenance facility for the trucks.
The workforce there is highly experienced
and many of them have been there for a long
time. We produce about two and a half million
tonnes of quality iron ore product a year.”
November/December 2009
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Mining
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The International Resource Journal
November/December 2009
The Savage River workforce is a 600
person strong team based in Tasmania with
an annual cost base of about A$200 million
dollars. “Last year the revenue stream was
about A$350 million, and profits for the
company totalled A$87 million,” Clark says.
“When the iron ore prices are as good
as they were last year, it makes for a
very profitable operation. This year
we have seen the iron ore prices fall
following an 88 per cent increase last
year, but we’re still seeing great prices
in what can probably be classed as some
of the toughest economic conditions.”
The entire product from the
Savage River operation is underwritten
by two primary contracts.
“One is to our largest shareholder, Shagang,
who will take 1.7 million tonnes this year. We
also sell 800,000 tonnes to BlueScope Steel in
New South Wales,” Clark explains. “Basically
we sell all of our product. We know what we’re
going to get for it and we don’t sell any of it on
the spot market. Savage River is certainly has
leveraged to any increase in iron ore price.”
November/December 2009
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Mining
In addition to the strong team, contract
10
The Southdown development project
covered product and market flexibility,
Southdown, a large magnetite project
the infrastructure in place at Savage River
100 kilometres from Albany in the
offers huge benefits. This includes the
southwest of Western Australia, is a
mine site, the pipeline to Port Latta, 70
joint venture between Grange and Sojitz
kilometres west of Burnie, the pelletizing
Corporation, a Japanese trading house.
plant and dedicated facilities at the port.
“We’ve recently increased and augmented
“These are all there and paid for. The
the resource base here by 37 per cent to over
replacement cost of this infrastructure
650 million tonnes, a third of which is in the
would be around about a billion dollars,”
measured category, a third of which is indicated
Clark says. “Savage still has a mine life of
and a third of which is inferred,” Clark says.
at least 15 years, and reserves for 20 years,
“We have the potential and desire to grow that
so while it’s been around for a long time,
resource by another 25 per cent in due course.
and it still has plenty of time left.”
The mine has a potential and expected life
The International Resource Journal
November/December 2009
Grange Resources
in excess of 30 years, producing about seven
“The port of Albany currently exports
about three million tonnes a year of
wheat and wood chips. To that, we
would be adding around seven million
tonnes,” he says. “We’re looking to
deepen the channel into Albany and
add another berth, but, other than that,
we will fall into the existing operations
of what is a commercial port.”
million tonnes of magnetite product a year.”
In operation, Southdown will comprise a
similar set-up to that at Savage River; a large
open pit mine with a crushing plant and
concentrator producing concentrate which
will be pumped 100km to the city of Albany
through a buried pipeline. The company has
an abundance of options in place for the
pipeline corridor. Clark explains that just as
the location of Port Latta is beneficial for
“The power facilities that are already in
Savage River, the port of Albany is a huge plus
place are ideal and beneficial for operations
in terms of infrastructure for Southdown.
too. We will have to build a transmission
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November/December 2009
The International Resource Journal
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Mining
line from the major coal-fired power
“We’re focused on implementing the
systems and processes that go with
being a public company. We will also
finalise the permits for Southdown so
that we can get on with the detailed
engineering and start to really create
that future for Grange,” he says.
station to the site,” Clark explains.
“Water is another critical issue for this project,
and will be transported in to the site. Accordingly,
it will come from the Albany wastewater
treatment plant. As an additionaly benefit, we
will be recycling the water that the town uses,
thereby reducing waste, as well as cost.”
The Southdown permitting process which Clark
Future goals at Grange
speaks of is well underway. “We have two main
Clark says that Grange’s short-term
permits that we require for this project. One is for
goal is to further integrate the Savage
the mine, one is for the port. The initial permit
River operations into the company.
for the mine was granted about 15 months ago
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The International Resource Journal
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November/December 2009
Grange Resources
and we expect the final one to be issued within
use us as a vehicle to acquire other projects,
the next couple of months. The initial port permit
which may be easier than acquiring from within
should be issued within a month too,” he explains.
China,” he says. “We as a company are looking
“Once these permits have been received,
to be a provider of steel making feedstock to the
we can concentrate on detailed engineering
likes of our Chinese shareholders and others.”
and move towards the bankable feasibility
As the leading magnetite producer in the
study, so we’d probably be looking to
Australian region, Grange Resources is certainly a
start this mine in about 2013.”
strong, established and extremely promising one.
Looking further down the line, Clark says that
Fortuitous commoditiy prices in the foreseeable
there is great scope for Grange to build upon its
future bode well for Grange Resources. The
successful international shareholder relationships.
development of Southdown and the Savage River
“Our largest shareholder is a Chinese company,
operation are evidence that smart geological
and there’s certainly an opportunity for it to
management is thriving at Grange.
November/December 2009
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PERTH OFFICE:
Level 11
200 St Georges Terrace
PERTH WA 6000
PO Box 7025
Cloisters Square
PERTH WA 6850
TELEPHONE: + 61 (8) 9327 7901
FAX: + 61 (8) 9327 7932
BURNIE OFFICE:
60 Wilmot Street
BURNIE TAS 7320
PO Box 659
BURNIE TAS 7320
TELEPHONE: + 61 (3) 6432 3377
FAX: + 61 (3) 6432 3390
WEBSITE: www.grangeresources.com.au
As seen in the November/December 2009 issue of The International Resource Journal